Mario Greco's Zurich Insurance Challenge in Three Chartsby
When Mario Greco became chief executive officer of Assicurazioni Generali SpA in 2012, he was tasked with turning around one of Europe’s largest insurers. In his new job as CEO of Zurich Insurance Group AG, he will have to do it all over again.
Greco’s priority when he joins Zurich is expected to be to cut costs to revive earnings, in an attempt to catch up with larger European competitors Allianz SE and Axa SA. The following three charts illustrate the challenges that the 56-year-old Neapolitan will face.
Generali’s annual net income jumped after Greco took the helm as the company shed assets to raise funds, while Zurich’s earnings have grown only marginally. Critics have questioned the Swiss company’s ability to sustain a dividend yield, the highest among European insurers, in the face of near-zero revenue growth over the past two years.
Costs at Zurich’s non-life operations have risen sharply since the start of 2013, as measured by the expense ratio, which compares expenses to premium income. The general insurance unit, Zurich’s main non-life insurance operation, reported losses for the third and fourth quarters. That forced the company to drop a bid for Britain’s RSA Insurance Group Plc in 2015.
Zurich has already taken measures ranging from cutting jobs in the U.K. to sharing desks to reduce costs, though these have yet to improve its bottom line. That’s held back the shares, which have lost 40 percent since reaching a peak in March 2015.